2 About the 2015 Fidelity Retirement Survey This study was commissioned by Fidelity Investments and was conducted between October 22 and November 3, 2014, by The Strategic Counsel. The Fidelity Retirement Survey was first commissioned to provide Fidelity with information about the attitudes and behaviours of preretirees and retirees in the Canadian marketplace, including their hopes and fears about retirement, their expectations regarding working in retirement, and how they anticipate they will fare financially during this stage of life. This is the tenth year that the survey has been conducted. The survey was conducted among 1,392 Canadians 45 years of age and older: A disproportionate sample of 1,392 pre-retirees and retirees is completed annually to allow for regional analysis. The results are then weighted to reflect the national proportionate distribution of those 45 years of age and older. Were a probability sample of this size to be undertaken, it would yield results accurate to +/- 3.1 percentage points, 19 times out of 20. Total number of respondents 1,392 CANADIANS SURVEYED Respondents age range 45+ MEDIAN AGE 57 Of the total number of respondents... 52% 48% About our expert Peter Drake Vice-President, Retirement and Economic Research, Fidelity Investments Canada Peter joined Fidelity in 2006 and leads the firm s research in economics, capital markets and issues around planning for and living in retirement. He has over 40 years of experience as an economist, and before joining Fidelity, he worked at the economics department of the TD Bank Financial Group, including 11 years as Vice-President and Deputy Chief Economist. Peter is a noted expert on retirement and presents his research and insights across the country and in the media. His work at Fidelity has resulted in his being an invited speaker at several conferences on retirement. Achieving retirement fulfillment Achieving retirement fulfillment can mean different things to different people, but at its core, retirement fulfillment starts with creating opportunities to have choices in retirement choices to play, to work or to learn. This report will outline some of the questions and ideas that Canadian pre-retirees and retirees are thinking about. The word cloud below highlights the words retirees associate with their retirement the larger the word, the greater the association. How does this compare to your vision of a fulfilling retirement? FamilyFulfilling work Poverty Having to work Contentment Balance Enjoyment Creating opportunities to have choices in retirement takes time, planning, discipline and patience, but once achieved, you can have the freedom and flexibility to do what you find fulfilling. Percent of pre-retirees with a positive outlook on retirement 100% 75% 50% 0% Excitement Freedom Loneliness Prosperity Having to work Fulfilling work Security WITHOUT Loneliness Financial stress WITH Slowing down Boredom gradually Fear Percent of retirees with a positive outlook on retirement 100% 75% 50% 0% WITHOUT Fear Fun Volunteering Disappointment Poor health WITH FIDELITY SURVEY REPORT PAGE 1

3 Working with a financial advisor Funding retirement income Creating opportunities to have choices in retirement can be much easier when investors decide to work with a financial advisor. Financial advisors provide investors with the guidance, discipline and partnership to create a financial plan that fits the investor s retirement vision. According to Fidelity s retirement survey, pre-retirees and retirees who work with a financial advisor are more confident and more likely to achieve their desired retirement lifestyle than those who do not. Beyond investment advice: Most valued versus service provided PLANNING / INCOME PLANNING TAX PLANNING One of the most important choices you can make is the decision to work with a trusted financial advisor. Being an active participant in your retirement planning can give you the discipline to stay on the path to achieve your desired retirement lifestyle. 62% OF EXPECT TO CONTINUE WORKING IN 54% OF WORKING DO SO FOR FINANCIAL REASONS 27% OF ARE CURRENTLY WORKING AT LEAST PART-TIME IN Creating choices in retirement begins with a diverse set of retirement income options. Retirees need to match their retirement lifestyle with their retirement income. A significant change for many retirees is the shift from receiving one paycheque to receiving income from multiple sources. Advisors can help create a plan to achieve a desired retirement lifestyle. Sources of income: GOVERNMENT OAS, CPP/QPP DEFINED BENEFIT PENSION PLAN OTHER SAVINGS GOALS Of respondents who have an advisor... Inheritance DEFINED CONTRIBUTION PENSION PLAN ESTATE PLANNING HEALTH CARE PLANNING INSURANCE 91% ARE CONFIDENT IN THE ADVICE THEY RECEIVE IS AN ANTICIPATED SOURCE OF INCOME FOR 22% OF 37% EMPLOYEE PENSION PLAN REGISTERED SAVINGS OTHER 0% 10% 20% 40% 50% 60% 70% LEGEND Retirement timing: ADVICE MOST VALUED BY RESPONDENTS SERVICE PROVIDED BY ADVISORS 37% HAVE A WRITTEN INCOME PLAN OF ARE CONCERNED THAT MARKET VOLATILITY WILL ADVERSELY AFFECT INCOME FROM SAVINGS 48% OF RETIRED EARLIER THAN THEY HAD PLANNED NON-REGISTERED SAVINGS INHERITANCE EMPLOYMENT INCOME LIFE ANNUITY Retirees working with an advisor OF HAVE A WRITTEN WILL OTHER RETIRED ABOUT THE AGE PLANNED 45% RETIRED EARLIER THAN PLANNED Trust IS THE TOP REASON RESPONDENTS SEEK ADVICE FROM The goal for retirement planning is creating retirement income that is large enough to meet your needs, predictable enough to make plans and sustainable enough to last as long as you need it. 0% 20% 40% 60% 80% 100% ANTICIPATED SOURCES LEGEND ACTUAL SOURCES RETIRED LATER THAN PLANNED 7% 1% PREFER NOT TO ANSWER PAGE 2 FIDELITY LEADERSHIP SERIES FIDELITY SURVEY REPORT PAGE 3

4 Retirement in Canada Spanning a decade Market conditions may vary over time but your retirement planning is forever. What will the next decade mean for your retirement? S&P/TSX Composite Total Return Index There are three key observations on retirement from the last decade 1. Working in retirement is not a retirement plan. 2. Inflation is a risk to retirement income. 3. Financial advice is key to retirement fulfillment CUMULATIVE TOTAL RETURN: 12/31/2004= % OF INTEND TO RETIRE BEFORE THE AGE OF 65, WHILE 39% OF RETIRE BEFORE THE AGE OF 65 #1 REASON FOR RETIRING IS MEDICAL/ HEALTH REASONS 51% OF SAY THEY WILL LIKELY WORK FULL OR PART TIME FOR AN EMPLOYER EVEN AFTER THEY TRANSITION INTO 6 OF AND 50% OF VIEW inflation AS THE GREATEST RISK TO THEIR INCOMES FOR, 58% PLAN TO MAINTAIN THEIR CURRENT STANDARD OF LIVING IN OF MAINTAIN THEIR STANDARD OF LIVING FROM PRE- THAN HALF OF AND FEEL THEIR FINANCIAL ADVISOR IS REALLY VALUABLE IN HELPING THEM UNDERSTAND FINANCIAL MARKETS DURING PERIODS OF VOLATILITY FOLLOWING RECENT FINANCIAL MARKET VOLATILITY, ABOUT A QUARTER OF AND INCREASED THEIR INVESTMENTS INTO CONSERVATIVE ASSETS SUCH AS BONDS AND CASH Retirees top reasons for continued employment... 65% TO STAY MENTALLY AND/OR PHYSICALLY ACTIVE 57% FOR FINANCIAL REASONS AND 45% TO KEEP BUSY THAN HALF OF WHO WORK WITH A FINANCIAL ADVISOR FIND THEIR TRANSITION INTO easier THAN EXPECTED BOTH AND SAY THEY HOPE TO REPLACE WORK WITH hobbies AND SPEND MUCH TIME WITH FAMILY AND FRIENDS IN 78% OF FEEL POSITIVELY ABOUT HOW THEIR LIVES WILL BE IN 85% OF ARE ACTUALLY EXPERIENCING THESE POSITIVE FEELINGS IN PAGE a FIDELITY LEADERSHIP SERIES FIDELITY SURVEY REPORT PAGE b PAGE 4 FIDELITY LEADERSHIP SERIES FIDELITY SURVEY REPORT PAGE 5

5 The 5 key risks to retirement income Making choices about debt Most retirees are aware of the financial issues they may face in retirement. In general, preretirees were more worried than retirees. That could be a healthy sign, indicating an awareness of the issues that could lead to better preparation. In the widely read 2011 report, After the global financial crisis The 5 key risks to retirement income, Fidelity outlined five factors that must be accounted for in any retirement plan. Even low (2% annual) inflation can reduce purchasing power over a 25-year retirement 2% = -40% INFLATION RATE REDUCTION IN PURCHASING POWER OVER 25 YEARS Where will the money come from? Retirement income Working in retirement Home equity Inflation hurts retirees more than any other group. In retirement, you have to plan for inflation, because it can do a lot of damage over the long term. Respondents perceptions of the risks to personal financial security in retirement Inflation The potential for rising prices to erode purchasing power Health care The chance that out-of-pocket costs may drain savings Asset allocation Choosing the wrong mix of equities, bonds and short-term securities Withdrawal Taking out too much from savings and running out of money Longevity The risk of outliving one s savings 31% 3 45% 42% 46% 46% 49% 5 58% Attitudes about debt are shifting among Canadians, and decisions about debt in retirement need to be carefully considered. More pre-retirees expect to carry debt into retirement. If investors decide to carry a mortgage or other debt into retirement, they need to make sure it does not limit their choices. Worried about the amount of debt that I am carrying Pre-retirees... 34% 34% 16% 16% 12% 12% LESS LESS 5% 5% 5 5 THAN THAN Retirees... 19% 19% 15% 15% 9% 9% LESS 9% LESS 9% % 57% Pre-retirees debt levels will be somewhat higher than retirees had when they retired. Pre-retirees will owe... Retirees owed... THAN THAN Canadians love owning homes, and an increasing number of homeowners are planning to use their home equity to help fund their retirement. But this may not be an effective strategy to generate retirement income. The value of home equity for Canadian households almost doubled in ten years... $2.4 trillion AT THE END OF 2013 $1.3 trillion AT THE END OF 2003 Source: Investor Economics. Percent of people who are very or somewhat likely to use their home for future income... 36% 21% OF OF Percent of people who already sold/borrowed against a home... 7% 12% OF OF PAGE 6 FIDELITY LEADERSHIP SERIES FIDELITY SURVEY REPORT PAGE 7

6 Defining a retirement lifestyle Retirement checklist Retirement is being redefined. Achieving retirement fulfillment means that individuals have created the opportunities to play, work or learn. Taking the time to envision retirement before it happens will help create a plan that achieves this vision. A significant number of Canadians say they plan to be working, in some capacity, during retirement. Many people choose to work in retirement to keep busy, while others work primarily for the extra income. Retirees providing assistance or support to elderly parents Retirees top reasons for continued employment... 58% TO STAY MENTALLY AND/OR PHYSICALLY ACTIVE 54% FINANCIAL REASONS A few steps that can help you achieve retirement fulfillment Envision your retirement lifestyle. There are lots of things to do in retirement. Try it out. Try some retirement activities before you retire. This gives you an opportunity to get a better sense of those activities you like to do and to revise your plan ahead of time. Retirement fulfillment, ideally, is about choice. And to be in a position to make the choices you want, you need to prepare ahead of time. You need to know what you want to do in retirement, and you need a financial plan that will provide you with the income to do those things. HAVE PARENT BUT PROVIDE NO ASSISTANCE PROVIDE ASSISTANCE TO PARENT(S) The sandwich generation 8% OF EXPECT TO OR ALREADY SUPPORT AN ELDERLY PARENT 27% OF ARE SUPPORTING OR HAVE SUPPORTED AT LEAST ONE CHILD AFTER RETIRING 2 29% 48% NO LIVING PARENTS FOR THE 29% THAT PROVIDE ASSISTANCE TO PARENT(S), 34% OF SAY IT IS TAKING MUCH TIME THAN ANTICIPATED TO KEEP BUSY While the number of people working in retirement is increasing, planning to work in retirement is not good retirement planning, because of the risks around personal health, changes to your workplace and your own attitudes about continuing to work. Get advice. Talk with your financial advisor about the type of retirement you want. Make a plan. Work with your financial advisor to come up with an achievable retirement plan. Create your retirement paycheque. Diversify your retirement income to protect against the unexpected. Don t forget about debt. Think about the type and level of debt that you are comfortable carrying. Get involved. Be an active participant in your retirement planning talk with your financial advisor regularly to evaluate your progress on achieving your retirement vision. Looking for more information? Visit gettingadvice.ca to learn more about Fidelity s Getting Good Advice series. PAGE 8 FIDELITY LEADERSHIP SERIES FIDELITY SURVEY REPORT PAGE 9

7 The tenth Fidelity Retirement Survey was commissioned by Fidelity Investments and was conducted between October 22 and November 3, 2014, by The Strategic Counsel Fidelity Investments is a registered trademark of FMR LLC E SAL /15

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